Tuesday, January 24, 2012

German Solar Firm Q-Cells to Restructure ($QCEG)

From a press release by Q-Cells today:

Q-Cells SE plans a restructuring of its financial liabilities in two steps. After intensive negotiations with different creditor groups, the Company initially aims to come to an agreement with the holders of the convertible bond due at the end of February 2012. This agreement will provide among others for a partial repayment of the outstanding bond volume in tranches over a period of time. In a second step, and in due course, the convertible bonds due in 2014 and 2015 shall be restructured via a debt-to-equity swap.
"Partial repayment in tranches" would mean that those bondholders are getting a haircut, and getting paid in new debt with later maturities. And it sounds like the 2014 and 2015 bonds are getting only shares. The company has yet to publicly announce the details, but you would expect the shareholders to be basically wiped out in this restructuring.

In the same press release, the company mentions that it does not expect to achieve operating profit until 2014. In my experience, when someone projects that something will happen more than six months away, it either means never or "I don't know".

They will apparently be cutting manufacturing operations in Germany by 50% (more excess capacity in PV solar!).

Anyway, this is all good news for the short solar trade. Tons of excess capacity, and other firms that will emerge more competitive after restructuring.